The Wall Street Journal’s Cheesecake Fallacy

There I was, reading Atul Gawande’s excellent piece about the future of medicine in the New Yorker, and thinking: hmm. Maybe we won’t need a major government presence in reforming the current, ridiculously wasteful system, maybe the free market will reform itself. After all, Gawande spends most of the piece showing how medical systems, which include groups of hospitals, are using electronic data-keeping and monitoring to achieve much better results for patients at less cost. The libertarian extremists on the Wall Street Journal editorial board will absolutely love this…but wait a minute:

There’s a long editorial about Gawande’s piece today in the Journal and they hate it. How could that possibly be? Because they categorize Gawande as a liberal bureaucrat-lover who wants government control of health care, as evidenced by his support for Obamacare (let’s leave aside the fact that the Wall Street Journal editors used to love Obamacare’s individual mandate, when it was the Republican alternative to Hillarycare in 1993).

But clearly, they haven’t read the piece. Gawande doesn’t mention the government at all. He talks about how the Cheesecake Factory restaurant chain achieves quality control in a large, nationwide system. It’s fascinating, but nothing new–it features the sort of inventory control and market research that consultants (like Bain, for example) have been promoting for the past 30 years. Then Gawande shows how several hospital chains in the Boston area are doing the same sort of thing to improve the quality of care and lower costs and, not coincidentally, produce higher profits. He uses the very specific example of his mother’s knee replacement, which is accomplished with less hospital time and cost (and pain, and greater mobility achieved more quickly) than her previous partial knee-replacement because the doctor involved has made a study of best practices.

Gawande also visits a intensive care unit control hub–a group of doctors and nurses monitoring patients on video screens, double-checking the work of the doctors and nurses on the wards–that provides more, indeed constant, attention to the patients and reduces the costs caused by mistakes and inattention.

In other words, the kind of changes Gawande describes are the kind of changes that the Journal has been celebrating throughout the American economy for the past 30 years. His piece set me to thinking that if all medicine ran this efficiently, we could save a lot of money and improve care dramatically, with a minimum of monitoring by federal regulators–and create a truly universal system of mandates and market choices, in which Medicaid and Medicare would cease to exist. This would combine Paul Ryan’s market vision with that of Peter Orszag and other Obamaites, who see electronic data and best practices as the way to achieve better, less costly care.

Let me reiterate in the simplest possible words: there is a way to solve our medical crisis that will make everybody happy (except for those who are feasting off the excess, unnecessary tests and procedures and hospital visits that are the cholesterol clogging our current system). Gawande has pointed a way toward that future that is happening now, naturally, through the free market system–and yet the Journal goes berserk because it perceives Gawande as a member of an enemy tribe. This is an exceptionally shoddy, myopic bit of business. The Journal’s ed board needs to check its medications.

Actually Joe, Atul's New Yorker article is very flawed as most public health policy analysts will tell you. It's uncharacteristic for him, but his mistakes in the article have been the :talk of the town". Too many to rcount here, but just one for an example. He makes much of electronic data systems. Yes, they are a good step. However, unlike the cheesecake factory, it's virtually impossible to establish a common system even for all payors, hospitals and physician practices in a single "system". Even the Feds have stayed away from the nightmare of establishing a single record system. Why? As one physician complained to me after seeing the New Yorker article, "It's a plot to look over our shoulder and manage my care to patients. Imagine if we all used the same system!" The Journal may hate the "cheesecake" analogy for the wrong reasons, but there are good reasons to reject it.

"This would combine Paul Ryan’s market vision with that of Peter Orszag and other Obamaites, who see electronic data and best practices as the way to achieve better, less costly care."

...proposed rule would specify the Stage 2 criteria that eligible professionals (EPs), eligible hospitals, and critical access hospitals (CAHs) must meet in order to qualify for Medicare and/or Medicaid electronic health record (EHR) incentive payments. In addition, it would specify payment adjustments under Medicare for covered professional services and hospital services provided by EPs, eligible hospitals, and CAHs failing to demonstrate meaningful use of certified EHR technology and other program participation requirements.

You are impenetrably dense, due to your pathological anti-government, pro-market ideology. No market system can ever, could ever, beat the efficiencies of a single-payer system, and it's been proven across the globe for more than a generation. Did Jimmy Carter kick you in the nads or in the brains?

I realize now that I should have been more specific. Markets could be, would always be, ruthlessly more efficient at siphoning off healthcare dollars to hungry shareholders and managers. That's what markets are for.

The Cheesecake Factory is a great model for healthcare but for one thing--if they start screwing up, you can always eat at Olive Garden, etc. Once Obamacare is implemented, and the Independent Payment Advisory Board decides that your life is not worth the Plavix to keep you alive, you cannot go pay a doctor out of pocket to get the care you need. You just die.

Because the insurance companies are only interested in making sure you are getting the medical treatment you need, not their profit margin or their shareholder's dividends.

Because no one dies now due to lack of insurance or not being able to afford their medical care or expensive medication, even with insurance.

And Plavix is actually cheap. A better example is chemo, (especially long term ones you have to keep taking, like Gleevec), or IgG, or interferon. Or organ and tissue transplants. Insurance companies never deny these things because of cost.

It's big, bad Obamacare, that's going to do you in. Right. Didn't you get the memo? Palin's Death Panels were a complete fabrication, and that talking point is so 5 minutes ago.

Don't let reality, or actual knowledge, get in the way of your ideology. Ignorance is bliss, after all.

What's your point? If I don't like my insurance company, I can find a new one. If I don't like that answer, I can pay the doctor directly. Under Obamacare, I get no choice. I get no appeal. If the Independent Payment Advisory Board decides that no one over thirty gets treated for cancer--no one over thirty gets treated for cancer. Sarah Palin did not invent the Independent Payment Advisory Board--your messiah did.

But if OCA will not pay for a $100.00 tetanus shot, you are prohibited from paying for that yourself. You simply die of tetanus. That is a part of why this is such an abomination. Also, you cannot buy a basic insurance policy. Every policy under OCA will require coverage of things like gender reassignment surgery. So my policy of $700 per month is going to cost $2300 per month. I cannot afford that. As a result, I will no longer have insurance, plus have to pay the tax, plus get no health care.

If you are sick, you can't find a new insurance company. None will insure you. If you are not a huge multimillionaire, you can't pay a doctor directly...and besides, there's nothing in 'Obamacare' saying you can't pay a doctor directly if you did have that money.

I pointed out that those horrible things are currently happening under our crappy system, perpetrated by for profit insurance companies.

Your answer is that you can pay your doctor directly, out of pocket, for a denied organ transplant? Or medicine that costs thousands per dose? Clearly you must be as rich as Romney.

Also, if you think you can just appeal to an insurance company and get your way...well, I hope you never actually have to do that. You're in for a surprise.

The IPAB specifically applies to Medicare, and Medicare only. It would be impossible for them to decide your ridiculous example of denying cancer treatment for anyone over thirty--can't be on Medicare until you're 65, remember? It's goal is to make Medicare more efficient and cut costs by eliminating redundancies and such. That sounds very agreeable to the Republican talking point of reigning in entitlement spending and how Medicare is going to bankrupt us all. What you described was Sarah Palin's mythical Death Panels, not the IPAB.

What choice, exactly, is the ACA taking away from you? The choice to be uninsured? The only mandate is to go get insurance--go pick something out. Anything you like. It downright encourages you to go pick a new insurance company if you don't like yours. It's so free market Republican, it originated at The Heritage Foundation.

And no one calls Obama a "messiah" except right wingers.

You should try RedState--you'd fit right in, and facts are optional.

I'm quite through with you. Go ahead and get the last word in to make yourself feel good.

The problem that needs to be overcome is truly the myopia of those responsible for implementing the changes required to realize the changes. These systems require planning, effort, and alot of money to implement...all before they save a dime. My career is built upon implementing similar systems, and the script is always the same. Nobody can afford it, then nobody can make it happen, then nobody wants to learn how to use it, until (ultimately) nobody can imagine life without it.

I mentioned this before but I will ask again. Gawande is a phenomenal writer, doctor and thinker, but I am not following the logic to how it will decrease costs. Big healthcare systems definitely save on waste, but how will that translate to the patients? I'm not convinced giant health corporations will be willing to kick back the newly found millions every year. Great for the hospital, not convinced it is great for the consumer.

That is just he business side of things though. When it come to the technical side of standardizing oversight of procedures, I am a big supporter.

The problem is that while some companies/entities work to create a well run, prosperous company that adopt best practicies simply because it also leads to better and cheaper products including more satisfied customers, all to many companies don't. Because they're there to give the bump in stock prices to reap the gratious bonuses while their businesses stagnates and eventually falter.

I bet with a minimum regulatory frame work best practice could become a norm and where the lazy companies cause less damage to the overall economy as suppose to the good vs he run wild and destroy types.

Agree. Relying on all players in a private market to play nice won't work. Cheesecake Factory may cooperate, Walmart less so. Back in Alan Greenspan's Ayn Rand days, he wrote two essays for Capitalism: The Unknown Ideal. One made case for less regulation since companies should act in their best interests with best service, integrity, etc. and NOT engage in cutting corners and ripping off people. Reality, of course, dumps his entire premise overboard as it happens all the time.

Always reassuring how liberals turn first to coercion (the individual mandate) followed by violence ("[t]hese guys have to be kicked out of the way.") I cannot imagine why their ideas are not more popular.

His piece set me to thinking that if all medicine ran this efficiently, we could save a lot of money and improve care dramatically, with a minimum of monitoring by federal regulators–and create a truly universalsystem of mandates and market choices, in which Medicaid and Medicare would cease to exist.

Ah yes I see it now. However this is an utopian view without any sense of reality of what this free-market mandate really means. To begin with there is no free market with a mandate. Second market choices means that some will have excellent care while others will have very difficult mandated choice to make, that in the end, those individuals will still not be seeing doctors and getting quality healthcare they need. Third like ACA it will not cover everyone.

Universal Joe means Universal, everyone gets quality care, there is only one way Joe, that is through Medicare.

Didn't you know Joe? If any journalist so much as write one op-ed without "I love America" or a diatribe about how Obamacare has ruined the nation, they're a part of the lamestream liberal media out to turn our great nation into a socialist state. Only one side (one far, far fringe element of one side) tells the truth, and everything else is a lie and a conspiracy. Then again you're part of the problem. I pulled out the letters V-O-T-E O-B-A-M-A from within your article; clearly this is some liberal plot to prevent Mitt Romney from becoming President. You thought you could slip it past us but after watching Glenn Beck for so many years, we're on to your game.